Wall: So, what is your first theme today?
Edelsten: The theme we are keenest on at the moment is automation. We are particularly impressed by not just the fact that robots are getting cheaper and more often used, but that they are cleverer and more nimble.
So, we particularly like not just the companies that make the robots but the companies that make the robots able to do things like surgery or handling food rather than just robots which cars which of course have been available for many decades now. And as we see some companies automated, of course, it encourages all their competitors to automate. Nobody wants to fall behind. So, this theme seems to have a snowball effect.
Wall: And what’s the second theme today?
Edelsten: So, a very different theme in terms of not really having anything in common with automation is tourism. Global tourist numbers have carried on growing at around 3% to 4% per annum for 25 years now.
Tourism, particularly in Asia, is growing at a startling rate, not least driven simply by the fact that the Chinese are giving out passports to a massive population which isn’t just getting wealthier, it’s also getting older, wants to travel more, wants to see more the world and actually weren’t given passports before. So, that’s a very reliable long-term growth theme. Not as exciting in terms of its top-line but much more reliable and less inclined to be hit by a cyclical downturn in the global economy.
Edelsten: There’s always been a decent level of tourism and particularly actually the aging population, older people travel, and they travel off season which fills up hotels and airports outside the school holidays. So, our investments here are typically in airports. So, we have a collection of airports. We own the company that controls Haneda Airport in Tokyo, the airport in Beijing, the airport in Sydney. But you are right, it is a global phenomenon.
We also own the airport in Paris. Paris is the favorite destination of the Chinese. So, there is the underlying increasing inclination of people to travel as it’s got cheaper, but there’s also this Asian element on top which really makes it a much more exciting theme.
Wall: And what’s the third and final theme?
Edelsten: So, our last theme is companies which can deliver healthcare relatively inexpensively. Now, this is – I think almost all growth managers and global equity managers can see that the aging population and also just the requirement for better health around the world drives demand. What we think people sometimes underestimate is that the budget to pay for that is limited. And that even if you invent a really good new drug unless it’s a lot better than the old drug, you are not going to be able to get the pricing margin that you used to be able to get.
So, what we are interested in the companies, not necessarily at the cutting edge of science but really efficient delivering solutions to a whole population at a very competitive price. So, we own dialysis companies, companies supplying the immunology industry, companies that make blood plasma, that sort of thing. And these generally have more reliable top-line growth, very good top-line growth, but they tend to be slightly overlooked by the analysts who spend more of their time on drug discovery.
Wall: Simon, thank you very much.
Wall: This is Emma Wall for Morningstar. Thank you for watching.